The issue of technical analysis versus fundamental analysis is a recurring theme in markets. Although CMC analyts are not bound by a house view, this is one area where we are gloablally in agreement. Why wouldn't a trader use all of the tools available? In other words we are all in favour, to a greater or lesser extent, of using combinations of fundamentals and technicals. 

In many trading plans a cluster of both chart signals and fundamental events is even more powerful.

Tomorrow morning at 4 am AEST the Fed will release the minutes from its May meeting. Although there is no anticipated change to interest rates it is likely the minutes will confirm the Fed's commitment to its tightening timetable. This could see the end of recent weakness and the USD resume its upward bias, and in the process knock AUD/USD lower.

Now have a look at the daily chart (above). The three candles in the circle are a reversal patter. There are a number of variations of this pattern in candlestick analysis, but they have elements in common. A strong up (down) day, a day of indecision represented by (inthis case) a doji, then a strong down (up) day. The fact that this reversal pierced and then fell back through key resistance just below 0.7500 adds to the weight of the signal.

to sum up, AUD/USD is giving a reversal signal at key resistance, less than 24 hours ahead of a potentially market moving event  fundamental event. Looks like a cluster trade to me.

 

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